On the roots of underdevelopment : “wrong equilibrium” or “miscoordination”?
Autor(a) principal: | |
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Data de Publicação: | 2021 |
Outros Autores: | |
Tipo de documento: | Artigo |
Idioma: | eng |
Título da fonte: | Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos) |
Texto Completo: | http://hdl.handle.net/10400.5/21678 |
Resumo: | This paper examines the Big Push industrialization model due to [Murphy et al., 1989] by featuring a game where public and private agents must coordinate their complementary investment decisions and the outcome where all agents invest dominates in payoffs the no-investment alternative. Two different paths of analysis are pursued. If the coordination game has complete information, the selection of the “right” equilibrium appears to be easier if the initial level of total factor productivity (TFP) is not too low. The comparison of the “payoff dominance” and the “risk dominance” criteria due to [Harsanyi and Selten, 1988] shows that the ability to plan jointly different kinds of investment relaxes the constraint on initial TFP. Industrialization can be alternatively modelled as an incomplete information game. In this case, underdevelopment follows from a coordination break, where typically the Government supplies infrastructures which remain underused because the private sector fails to modernize. We find out that such a coordination break is likelier in economies where the starting level of TFP is low. Consequently, a low initial TFP level tends to create a “Poverty Trap”, which however can be overcome by enhancing the ability to coordinate different kinds of investment, namely public and private. |
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On the roots of underdevelopment : “wrong equilibrium” or “miscoordination”?Big PushEconomic DevelopmentCoordination GameRisk DominanceIncomplete Information GameThis paper examines the Big Push industrialization model due to [Murphy et al., 1989] by featuring a game where public and private agents must coordinate their complementary investment decisions and the outcome where all agents invest dominates in payoffs the no-investment alternative. Two different paths of analysis are pursued. If the coordination game has complete information, the selection of the “right” equilibrium appears to be easier if the initial level of total factor productivity (TFP) is not too low. The comparison of the “payoff dominance” and the “risk dominance” criteria due to [Harsanyi and Selten, 1988] shows that the ability to plan jointly different kinds of investment relaxes the constraint on initial TFP. Industrialization can be alternatively modelled as an incomplete information game. In this case, underdevelopment follows from a coordination break, where typically the Government supplies infrastructures which remain underused because the private sector fails to modernize. We find out that such a coordination break is likelier in economies where the starting level of TFP is low. Consequently, a low initial TFP level tends to create a “Poverty Trap”, which however can be overcome by enhancing the ability to coordinate different kinds of investment, namely public and private.ISEG - REM - Research in Economics and MathematicsRepositório da Universidade de LisboaPontes, José PedroPeixe, Telmo2021-07-27T15:09:22Z2021-072021-07-01T00:00:00Zinfo:eu-repo/semantics/publishedVersioninfo:eu-repo/semantics/articleapplication/pdfhttp://hdl.handle.net/10400.5/21678engPontes, José Pedro e Telmo Peixe (2021). "On the roots of underdevelopment : “wrong equilibrium” or “miscoordination”?". Instituto Superior de Economia e Gestão – REM Working paper nº 0187 – 20212184-108Xinfo:eu-repo/semantics/openAccessreponame:Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos)instname:Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informaçãoinstacron:RCAAP2023-03-06T14:51:13Zoai:www.repository.utl.pt:10400.5/21678Portal AgregadorONGhttps://www.rcaap.pt/oai/openaireopendoar:71602024-03-19T17:06:13.369371Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos) - Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informaçãofalse |
dc.title.none.fl_str_mv |
On the roots of underdevelopment : “wrong equilibrium” or “miscoordination”? |
title |
On the roots of underdevelopment : “wrong equilibrium” or “miscoordination”? |
spellingShingle |
On the roots of underdevelopment : “wrong equilibrium” or “miscoordination”? Pontes, José Pedro Big Push Economic Development Coordination Game Risk Dominance Incomplete Information Game |
title_short |
On the roots of underdevelopment : “wrong equilibrium” or “miscoordination”? |
title_full |
On the roots of underdevelopment : “wrong equilibrium” or “miscoordination”? |
title_fullStr |
On the roots of underdevelopment : “wrong equilibrium” or “miscoordination”? |
title_full_unstemmed |
On the roots of underdevelopment : “wrong equilibrium” or “miscoordination”? |
title_sort |
On the roots of underdevelopment : “wrong equilibrium” or “miscoordination”? |
author |
Pontes, José Pedro |
author_facet |
Pontes, José Pedro Peixe, Telmo |
author_role |
author |
author2 |
Peixe, Telmo |
author2_role |
author |
dc.contributor.none.fl_str_mv |
Repositório da Universidade de Lisboa |
dc.contributor.author.fl_str_mv |
Pontes, José Pedro Peixe, Telmo |
dc.subject.por.fl_str_mv |
Big Push Economic Development Coordination Game Risk Dominance Incomplete Information Game |
topic |
Big Push Economic Development Coordination Game Risk Dominance Incomplete Information Game |
description |
This paper examines the Big Push industrialization model due to [Murphy et al., 1989] by featuring a game where public and private agents must coordinate their complementary investment decisions and the outcome where all agents invest dominates in payoffs the no-investment alternative. Two different paths of analysis are pursued. If the coordination game has complete information, the selection of the “right” equilibrium appears to be easier if the initial level of total factor productivity (TFP) is not too low. The comparison of the “payoff dominance” and the “risk dominance” criteria due to [Harsanyi and Selten, 1988] shows that the ability to plan jointly different kinds of investment relaxes the constraint on initial TFP. Industrialization can be alternatively modelled as an incomplete information game. In this case, underdevelopment follows from a coordination break, where typically the Government supplies infrastructures which remain underused because the private sector fails to modernize. We find out that such a coordination break is likelier in economies where the starting level of TFP is low. Consequently, a low initial TFP level tends to create a “Poverty Trap”, which however can be overcome by enhancing the ability to coordinate different kinds of investment, namely public and private. |
publishDate |
2021 |
dc.date.none.fl_str_mv |
2021-07-27T15:09:22Z 2021-07 2021-07-01T00:00:00Z |
dc.type.status.fl_str_mv |
info:eu-repo/semantics/publishedVersion |
dc.type.driver.fl_str_mv |
info:eu-repo/semantics/article |
format |
article |
status_str |
publishedVersion |
dc.identifier.uri.fl_str_mv |
http://hdl.handle.net/10400.5/21678 |
url |
http://hdl.handle.net/10400.5/21678 |
dc.language.iso.fl_str_mv |
eng |
language |
eng |
dc.relation.none.fl_str_mv |
Pontes, José Pedro e Telmo Peixe (2021). "On the roots of underdevelopment : “wrong equilibrium” or “miscoordination”?". Instituto Superior de Economia e Gestão – REM Working paper nº 0187 – 2021 2184-108X |
dc.rights.driver.fl_str_mv |
info:eu-repo/semantics/openAccess |
eu_rights_str_mv |
openAccess |
dc.format.none.fl_str_mv |
application/pdf |
dc.publisher.none.fl_str_mv |
ISEG - REM - Research in Economics and Mathematics |
publisher.none.fl_str_mv |
ISEG - REM - Research in Economics and Mathematics |
dc.source.none.fl_str_mv |
reponame:Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos) instname:Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informação instacron:RCAAP |
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Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informação |
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RCAAP |
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RCAAP |
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Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos) |
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Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos) |
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Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos) - Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informação |
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1799131155053674496 |